by Ted Sorensen
In fact, one of his favorite stories, which he repeated again on the fifteenth of November, 1963, related how French Marshal Lyautey’s gardener sought to put off the persistent Marshal by reminding him that the trees which he wanted planted would not flower for a hundred years. “In that case,” the Marshal had said, “plant it this afternoon.” John Kennedy believed in planting trees this afternoon.
As his months in office increased, however, he talked more and more about the limitations of power.
“Every President,” he wrote in the Foreword to my book on Decision Making in the White House, “must endure a gap between what he would like and what is possible.” And he quoted Roosevelt’s statement that “Lincoln was a sad man because he couldn’t get it all at once. And nobody can.”
His strategy in the Presidency, as in politics, was to keep moving, looking for openings, hoping to make the breaks fall his way. He was wise enough to know that in a nation of consent, not command, Presidential words alone cannot always produce results.
Near the end of November, 1963, he wrote a letter to Professor Clinton Rossiter, whose work on The American Presidency he greatly admired. Rossiter had dedicated his book with a line from Shakespeare’s Macbeth: “Methought I heard a voice cry, ‘Sleep no more!’” Kennedy, who could sleep with his perils but not always waken others to them, suggested in his letter as “more appropriate” the exchange between Glendower and Hotspur in Part I of Shakespeare’s Henry IV:
GLENDOWER: I can call spirits from the vasty deep.
HOTSPUR: Why, so can I, or so can any man;
But will they come when you do call for them?
1 On the plane back from his exhausting barnstorming tour of Europe in 1963, he told me his back was better than ever and speculated that giving vent to all his energies and feelings in some forty speeches in ten days had relieved the tension.
2 Jacqueline had been nervous about JFK’s reaction to her redoing the Olive Room in white. “I like it,” he said, “if you can get away with it.”
3 In discussing this concept with me before the program, he mentioned a series of poor recommendations he had received from Senator Smathers on the Dominican Republic, adding, “And now he’s telling me what to do about Cuba.”
CHAPTER XVI
THE FIGHT AGAINST RECESSION
DURING THE FOUR YEARS following John Kennedy’s inauguration the United States experienced the longest and strongest economic expansion in this nation’s modern history, as the output of goods and services increased more in four years than it had in the previous eight. The rate of national economic growth in 1960 was less than 3 percent, and a major talking point in his campaign. The three-year average during 1961-1963 was nearly double that level.
Nixon in 1960 had derided Kennedy’s complaints about the growth rate, and some of Kennedy’s own advisers were doubtful that these figures meant much to most voters. But to Kennedy they meant jobs. By the end of 1963 a record $100 billion, 16 percent growth in the nation’s total output had provided more than two and three-quarter million more jobs and a record rise in labor income. The amount of idle manufacturing capacity had been reduced by half, and for the first time the seventy-million-job barrier had been shattered. The postwar trend of recurring recessions had been broken; the recession which was “due” in 1963 had been skipped; and nearly every indicator of the state of the economy was at a record level.
The President was far from satisfied with these gains. Too many men were still without work. Too many families, in Appalachia and Harlem and other centers of poverty throughout the country, were still without hope. He had plans to do more in the years ahead. He had regrets that he had been unable to do more in the years that had passed. But those who throughout his tenure were demanding that he do more and do it all at once clearly misjudged both the man and the mood of the Congress and country. Partly because he did move cautiously, deliberate carefully, talk conservatively and seek counsel from a Republican Secretary of the Treasury, he obtained from the Congress a host of far-reaching economic measures, all while under heavy Republican attack, and all while confronted with a delicate and dangerous imbalance of international payments, an “independent” Federal Reserve Board and a conservative coalition in Congress.
The President would not claim that Federal actions alone had been responsible for all the economy’s gains. Nor do I claim that he devised all his own economic policies. Kennedy had little formal background in economics. Nixon accused him in the campaign of being an “economic ignoramus…who doesn’t understand simple high school economics.” Young Jack Kennedy probably didn’t learn much economics in high school—few do—or, for that matter, anywhere else. At Harvard he had received a “C” in a beginning economics course from instructor Russ Nixon, whom Congressman Kennedy later enjoyed cross-examining when Nixon turned up as an official with a union kicked out of the CIO for its relations with Communist fronts. Republican fears to the contrary, illness had prevented him from obtaining much exposure to Harold Laski at the London School of Economics. His letters home from college indicated that he was operating on a “budget” and occasionally dabbling in stocks, and he sought as a Senator to keep at least his household operations within the confines of his Senate salary. But he had little interest in his father’s business or most of his own economic environment, had no taste for economic theory and, even as a legislator, defied classification on the economic spectrum. As President he was generally more cautious on spending than the Republicans thought but more liberal than his tight-fisted handling of the Budget indicated. He did not regard government planning as socialism, but neither did he believe the Budget should never be balanced. He recognized limits on “big government’s” attempts to do everything, but few limits in combating unemployment and poverty.
He never mastered the technical mysteries of debt management and money supply. He once confided in his pre-Presidential days that he could remember the difference between fiscal policy, dealing with budgets and taxes, and monetary policy, dealing with money and credit, only by reminding himself that the name of the man most in charge of monetary policy, Federal Reserve Board Chairman William McChesney Martin, Jr., began with an “M” as in “monetary.”
But as President he more than compensated for his limited background in economics by his superb ability to absorb information and to ask the right questions. He was surrounded with probably the most knowledgeable group of articulate economists in U.S. history. He recognized the role of economics in all his decisions, and included Walter Heller in his pre-press conference breakfasts and pre-State of the Union meetings.
The members of the Council of Economic Advisers, led by Walter Heller and absolutely invaluable to the President (whom they kept buried in a tide of memoranda), emphasized more than the others the “gap” between our production and our potential. Treasury Secretary Dillon emphasized more than the others the international dangers of too large a Budget deficit. Part-time adviser Ken Galbraith—who helped work on our 1961 economic messages before taking up his duties as Ambassador to India (in what the President called Galbraith’s “period of penance”)—emphasized more than the others the benefits of more public spending. Labor Secretary Arthur Goldberg emphasized more than the others the uses of massive public works and other pinpointed solutions. The President’s leading “outside” economic adviser, Professor Paul Samuelson, emphasized more than the others the value of a temporary tax cut. Banker Martin, Businessman Hodges, Trader Ball and other department and agency heads emphasized more than others the needs of their respective clienteles. Budget Directors Bell and Gordon usually sided with Heller. My role, untrained as I was in economics, was simply to analyze and synthesize, refining issues for the President’s consideration and relating them to the larger legislative and political outlook.
All these advisers, it should be stressed, whatever their differences in emphasis, agreed on the same basic principles: that unemployment was too high, that Budget deficits at such times were both unavoid
able and useful, and that consumer purchasing power should be more strongly supported by Federal actions than had been true under the previous administration. The President paid most attention to Heller and Dillon, but he also mixed in his own readings, observations and sense of the national and Congressional mood. He was slow to grasp many of the theoretical economic doctrines presented to him, but on practicable proposals and problems he learned fast. An old friend and part-time adviser, Professor of Economics Seymour Harris, invited with his wife to watch the 1962 America’s Cup races at Newport with the Kennedys, spent most of the time discussing economics and later wrote:
His major responsibility is our security. What astonishes me is how much time the President nevertheless devotes to economic problems, how interested he is in them and how much he has learned in the last two years. He is now by far the most knowledgeable President of all time in the general area of economics.
Harris, recalling that Keynes had called Roosevelt economically “illiterate,” was no doubt biased, and the President thought Harris was hurting more than helping when, in reply to one of Kennedy’s liberal critics, he called the President a good Keynesian economist. But there was no doubt that John Kennedy, long after graduating from Harvard, had learned far more economics than most men in either public or academic life.
RECOVERY IN 1961
The task force report on the economy which Kennedy commissioned as President-elect in 1961, prepared by Paul Samuelson, bluntly used the term “recession,” which had been avoided throughout the campaign. Indeed, in every way it painted a dark picture of the economy. The recession, the report made clear, would not cure itself. “Not even the ostrich can avert the economic facts of life,” said Samuelson in the report. “He misreads the role of confidence in economic life who thinks that denying the obvious will cure the ailments of a modern economy.”
“That’s well put,” commented Kennedy to Samuelson as they reviewed the report in New York’s Hotel Carlyle two weeks before inauguration. He made no attempt in his first State of the Union address to deny the obvious:
The present state of our economy is disturbing. We take office in the wake of seven months of recession, three and one-half years of slack, seven years of diminished economic growth, and nine years of falling farm income….
Save for a brief period in 1958, insured unemployment is at the highest peak in our history. Of some five and one-half million Americans who are without jobs, more than one million have been searching for work for more than four months….
In short, the American economy is in trouble. The most resourceful industrialized country on earth ranks among the last in the rate of economic growth. Since last spring our economic growth rate has actually receded. Business investment is in a decline. Profits have fallen below predicted levels. Construction is off. A million unsold automobiles are in inventory. Fewer people are working, and the average work week has shrunk well below forty hours….
This Administration does not intend to stand helplessly by…to waste idle hours and empty plants while awaiting the end of the recession….
I will propose to the Congress within the next fourteen days measures…aimed at insuring a prompt recovery and paving the way for increased long-range growth.
“I painted the picture as I saw it,” said the President. “Anyone who makes the judgment that it was laid on thick for political reasons…is making a serious mistake.” Three days later, on February 2, 1961, he sent to the Congress the comprehensive Economic Message which had been in preparation for several weeks, proposing legislation (1) to add a temporary thirteen-week supplement to unemployment benefits; (2) to extend aid to the children of unemployed workers; 1 (3) to redevelop distressed areas; (4) to increase Social Security payments and encourage earlier retirement; (5) to raise the minimum wage and broaden its coverage; (6) to provide emergency relief to feed grain farmers; and (7) to finance a comprehensive home-building and slum clearance program. The first of these seven measures became law the following month, and all seven had been signed by the end of June. It had been 161 days of action.
These seven measures were not, as some suggested, too little and too late, for recovery, while beginning early, was a long, slow process. Nearly $800 million in extended jobless benefits for nearly three million unemployed, over $200 million in additional welfare payments to 750,000 children and their parents, more than $400 million in aid to over 1,000 distressed counties, $175 million in higher wages for those below the new minimum, and an estimated 420,000 construction jobs under the new Housing Act could not be termed “too little.”
Nor did the President limit his moves to Congressional action or wait for it. The need was to get more money into the economy fast. On his own initiative, under existing authority, he directed all Federal agencies to accelerate their procurement and construction, particularly in labor surplus areas. He compressed a long-range program of post office construction into the first six months, released over a billion dollars in state highway aid funds ahead of schedule, raised farm price supports and advanced their payment, and speeded up the distribution of tax refunds and GI life insurance dividends. To expand credit and stimulate building, he ordered a reduction in the maximum permissible interest rate on FHA-insured loans, lowered the interest rate on Small Business Administration loans in distressed areas, expanded its available credit and liberalized lending by the Federal Home Loan Banks. To aid the unemployed, he broadened the distribution of surplus food, directed that preference be given distressed areas in defense contracts, created a “pilot” Food Stamp program for the needy and expanded the services of U.S. Employment Offices. Finally, he encouraged the Federal Reserve Board to help keep long-term interest rates low through the purchase of long-term government issues.
While most of these administrative moves of the first 161 days added to the deficit—some by tens of millions of dollars, some by billions—none of them had to wait for legislation or appropriations. The money, instead of being stretched out, was paid out when the economy needed it most. While passage of a public works acceleration bill, for example, would have helped even more, the President to the extent possible accelerated them on his own. At the same time he made clear—and this may have had the most important effect of all—that he would not cut back Federal spending when the recession reduced Federal revenues, or permit a tightening of credit when recovery began.
The combined impact of these legislative and administrative steps, which largely implemented the recommendations of the Samuelson task force, had an impressive effect. The natural strength of private spending may well have ended the recession sooner or later anyway, but prompt action provided not only an initial impetus for recovery but grounds for the basic consumer and business confidence needed to unloosen that spending.
The President, moreover, did not want a repeat of the anemic recovery staged by the economy after the 1958 recession. That time production, employment and plant use had never returned to their normal rates before another recession ensued. This time, he said in his February 2 message, he wanted “full recovery and sustained growth…. If these measures prove to be inadequate to the task, I shall submit further proposals to the Congress within the next seventy-five days.”
The seventy-five-day reference reflected pressure from within the administration, from liberal Congressmen and from organized labor, for two other measures: a massive public works program and a temporary tax cut. The President promised that he would review the situation with his advisers in the spring to ascertain whether either step would then be recommended. By late spring he was convinced that the recovery would continue without either, and that the Congress would pass neither.
Make-work public works, in his view, were not likely to create many full-time jobs until too late to fight the recession, and they would, with considerable waste, add to the published Budget deficit during the very spring and summer he was requesting more defense funds. That extra defense spending, he ruled, would have to serve as a substitute stimulant.
Arthur Goldberg, convinced that the President should wage a fight for the bill in 1961 even if he lost, reminded him that Robert Frost had advised him to be “more Irish than Harvard.” But Kennedy only smiled. “As President,” he said, “I have to be both Harvard and Irish.” He promised Goldberg and organized labor that he would consider a more careful public works bill the following year.
Walter Heller and the tax cut advocates, on the other hand, were not only denied their request; they suddenly found themselves fighting to keep taxes from being increased.
A Federal income tax increase at that stage, even though it took no more money out of the economy than new defense spending was putting in, might well have aborted the shaky recovery that was then under way. Establishing a precedent of new tax increases to pay for every increase in defense spending would have plagued Kennedy the rest of his term. Such a mistake in his first summer in the White House could have equaled for domestic affairs the foreign affairs fiasco at the Bay of Pigs in his first spring. Interestingly enough, the proposed tax increase originated not with his economic advisers but among his foreign affairs advisers, but it was tentatively approved by the President and came dangerously close to being announced.
The occasion was the Berlin crisis of 1961. Those advocating a declaration of national emergency and massive mobilization originally recommended both stand-by price and wage controls and a tax increase in order to offset panic buying, prevent inflation and cover the cost of the mobilization. Later, when the military plans were scaled down to a lower key, the idea of a “special Berlin surtax”—either increasing all tax rates by a flat 2 percentage points or everyone’s tax by a proportionate 7.5 percent—still had great appeal. Applying to both individuals and corporations, it was to be a one-year addition only.